Hungary union protests test govt resolve on reforms-UPDATE 1

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Friday June 17, 2011 08:15:21 AM GMT

* Unions protest against cutting early pensions

* Govt popularity falls, but will not soften plans -analyst

* Some dress as clowns after what they saw as PM's mockery

(Updates number of protesters, adds detail)

By Marton Dunai

BUDAPEST, June 16 (Reuters) - Thousands of Hungarians, some dressed as clowns, protested against government moves to roll back early retirement benefits for the armed forces, police and firefighters and abolish the system of negotiating with unions.

The protest, which started near parliament, is the latest demonstration against the centre-right government, which took office a year ago and began to roll out austerity measures this year.

The reforms have pleased financial markets -- but led to increasing popular discontent with the government at home and its public support has waned. More than 10,000 people from the armed forces and other unions protested against the austerity measures and walked from parliament to the president's palace later on Thursday evening.

The unions called their protest a "clown revolution" with many of them wearing red noses, coloured wigs and face paint to protest against a remark by Prime Minister Viktor Orban, who they said had mocked them at an earlier protest by promising to send his "clown affairs secretary" to negotiate.

Protesters stood in line at mock polling stations to symbolically un-cast votes given to Fidesz in last year's election, in which it gained a two-thirds majority in parliament -- and therefore the right to change any laws.

"Nobody has been authorised by a two-thirds parliamentary majority to create retroactive laws, take away constitutional rights ... and destroy democratic institutions," union leaders Peter Konya and Kornel Arok said in a statement.

The government has said it would no longer pay pensions to people younger than the general retirement age of 65, including members of the police and the armed forces, who have had the right to retire as early as age 45.

Other unions also joined the protest, rallying against another new law that ends the existing system of consultations with employers and unions.

"I worked as a policeman all my life and for 25 years I thought I could retire," said Attila Bogdan, 49, a retired policeman. "Now I feel like someone who had been cheated on by his wife when he became a grandfather."

The government last year took an unorthodox path, diverging from the International Monetary Fund, imposing big windfall taxes on selected business sectors and effectively renationalising mandatory private pension funds.

Bowing to market demands for lasting structural reforms, the government this year pledged to cut spending sharply by 2013.

An analyst said that the government was unlikely to give major concessions and the real test of its policies lay in their ultimate economic effect, not the severity of street scenes now.

"I doubt the government would give any ground at this point and risk sending signals of diluting policy to markets," Gabor Takacs, a political analyst at Nezopont Institute, said.

"They'll try to carry out most of their plans and make only unavoidable concessions, which are priced in by markets anyway."

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